Smedley Butler & the “Business Plot,” Part I

In his testimony before Congress, Butler states that he was repeatedly visited by a somewhat shady cast of characters associated with the American Legion and a series of Wall Street and New York banking and bond trading firms. In July, 1933, the first of these men suggested that Butler attend a Legion convention to deliver a prepared speech on the importance of returning to the gold standard and supporting a bonus for veterans of the Great War. Butler supported the soldiers’ bonus, but he had no desire to attend the convention and become involved in backroom politicking. The clique repeatedly approached Butler before the convention, repeatedly attempted to bribe him with many thousands of dollars, and repeatedly Butler refused. Eventually, the men resolved to appeal to his sense of reason and revealed more of their plan. Butler was supposed to raise and lead a massive contingent of veterans and soldiers to practically force President Roosevelt to appoint him to the Cabinet as the newly-​minted “Secretary for General Affairs,” leaving Butler to rule the country while the president remained a figurehead. The conspirators drew upon extensive travels from Germany and Italy to Stalin’s Soviet Union, concluding that a bit of fascism was both necessary and proper in the United States as well. Should Butler continue to refuse, the plot’s backers would move instead to other candidates, including General Douglas MacArthur.

In the next part of the series, we will examine the committee’s assessment of the “Business Plot.”

Anthony Comegna

Assistant Editor for Intellectual History

CHAIRMAN. Without my asking you any further questions, will you just go ahead and tell in your own way all that you know about an attempted Fascist movement in this country?

BUTLER. May I preface my remarks by saying, sir, that I have one interest in all of this, and that is to try to do my best to see that a democracy is maintained in this country.

CHAIRMAN. Nobody who has either read about or known about General Butler would have anything but that understanding.

General BUTLER. It is nice of you to say that, sir.

But that is my only interest.

I think I had probably better go back and give you the background. This has been going on for a year and a half. Along—I think it must have been about the 1st of July 1933, two men came to see me…

One said his name was Bill Doyle, who was then the department commander of the Legion in Massachusetts. The other said his name was Jerry MacGuire…He had been State commander the year before of the department of Connecticut and was then living in Connecticut. Doyle was living in Massachusetts…

They were very desirous of unseating the royal family in control of the American Legion, at the convention to be held in Chicago, and very anxious to have me take part in it. They said that they were not in sympathy with the…present administration’s treatment of the soldiers.

They presented to me rather a confused picture, and I could not make up my mind exactly what they wanted me to do or what their objective was, but it had something to do with weakening the influence of the administration with the soldiers.

They asked me to go to the convention, and I said I did not want to go—that I had not been invited and did not care anything about going.

Then MacGuire said that…the distinguished-​guest committee of the American Legion…at MacGuire’s suggestion, put my name down to be invited…, that Johnson had then taken this list…to the White House for approval; that Louis Howe, one of the secretaries to the President, had crossed my name off and said that I was not to be invited—that the President would not have it. I thought I smelled a rat, right away—that they were trying to get me mad—to get my goat. I said nothing…It looked to me us if they were trying to embarrass the administration in some way…So many queer people come to my house all the time and I like to feel them all out.

Finally they said, “Now, we have arranged a way for you to come to this convention.”

I said, “How is that, without being invited?”

They said, “Well, you are to come as a delegate from Hawaii.”

I said. “I do not live in Hawaii.”

“Well, it does not make any difference. There is to be no delegate from one of the American Legion posts there in Honolulu, and we have arranged to have you appointed by cable, by radio, to represent them at the convention. You will be a delegate…”

I said “No; I will not do this…”

The substance of the second talk was this, that they had given up this delegate idea, and I was to get two or three hundred legionnaires from around that part of the country and bring them on a special train to Chicago with me; that they would sit around in the audience, be planted here and there, and I was to be nothing but an ordinary legionnaire, going to my own convention as an onlooker; not as a participant at all. I was to appear in the gallery. These planted fellows were to begin to cheer and start a stampede and yell for a speech. Then I was to go to the platform and make a speech. I said, “Make a speech about what?”

“Oh,” they said, “we have one here…”

I said, “Listen. These friends of mine that I know around here, even if they wanted to go, could not afford to go. It would cost them a hundred to a hundred and fifty dollars to go out there and stay for 5 days and come back.”

They said, “Well, we will pay that…”

It was either then or the next time, or one of the times, they hauled out a bank-​deposit book and showed me, I think it was $42,000 in deposits on that occasion, and on another occasion it was $64,000…

[I said] “Where did you get all this money? It cannot be yours.”

He said that it was given to him by nine men, that the biggest contributor had given $9,000 and that the donations ran all the way from $2,500 to $9,000.

I said, “What is the object?”

He said the object was to take care of the rank and file of the soldiers, to get them their bonus and get them properly cared for.

Well, I knew that people who had $9,000 to give away were not in favor of the bonus. That looked fishy right away.

He gave me the names of two men; Colonel Murphy, Grayson M.-P. Murphy, for whom he worked, was one. He said, “I work for him. I am in his office…”

I said, “What has Murphy got to do with this?…”

“Well,” he said “he is the man who underwrote the formation of the American Legion for $125,000. He underwrote it, paid for the field work of organizing it, and had not gotten all of it back yet.”

“That is the reason he makes the kings, is it? He has still got a club over their heads.”

“He is on our side, though. He wants to see the soldiers cared for.”

“Is he responsible, too, for making the Legion a strike breaking outfit?”

“No, no. He does not control anything in the Legion now.”

I said: “You know very well that it is nothing but a strike breaking outfit used by capital for that purpose and that is, the reason they have all those big club-​houses and that is the reasons I pulled out from it. They have been using these dumb soldiers to break strikes.

He said: “Murphy hasn’t anything to do with that. He is a very fine fellow.”

I said, “I do not doubt that, but there is some reason for him putting $125,000 into this…”

The next time I saw him was about the 1st of September, in a hotel in Newark…

I said, “You people are bluffing. You have not got any money.” Whereupon he took out a big wallet; out of his hip pocket, and a great, big mass of thousand dollar bills and threw them out on the bed…

I said, “Don’t you try to give me any thousand dollar bill. Remember, I was a cop once. Every one of the numbers on these bills has been taken. I know you people and what you are trying to do. You are just trying to get me by the neck. If I try to cash one of those thousand dollar bills, you would have me by the neck.”

“Oh,” he said, “we can change them into smaller denominations…”

I said…“I know one thing. Somebody is using you. You are a wounded man. You are a bluejacket. You have got a silver plate in your head. I looked you up. You were wounded. You are being used by somebody, and I want to know the fellows who are using you…”

He said…, “I will send Mr. Clark…”

I thought no more about it until the end of the week, when Clark called up and asked if he might spend Sunday with me. I said, “Yes…”

He said, “You have got the speech?” I said, “Yes…They wrote a hell of a good speech, too…” He laughed and said, “That speech cost a lot of money…” I got the impression that the speech had been written by John W. Davis—one or the other of them told me that…

I said, “The speech has nothing to do with what I am going to Chicago for. The speech urges the convention to adopt the resolution that the United States shall return to the gold standard.” MacGuire had said, “We want to see the soldiers’ bonus paid in gold. We do not want the soldier to have rubber money or paper money. We want the gold. That is the reason for this speech.”

“Yes” I said, “but it looks as if it were a big-​business speech. There is something funny about that speech, Mr. Clark.”

The conversations were almost the same with both of them.

Clark said, “You understand just how we are fixed. I have got $30,000,000. I do not want to lose it. I am willing to spend half of the $30,000,000 to save the other half…

Well, I said…,“I tell you very frankly, Mr. Clark, I have got one interest and that is the maintenance of a democracy…What the hell does a soldier know about the gold standard? You are just working them, using them, just as they have been used right along…”

He said, “Why do you want to be so stubborn? Why do you want to be different from other people? We can take care of you. You have got a mortgage on this house…That can all be taken care of. It is perfectly legal, perfectly proper…”

Finally I said…, “You are trying to bribe me in my own house. You are very polite about it and I can hardly call it that, but it looks kind of funny to me, making that kind of proposition. You come out into the hall, I want to show you something.”

We went out there. I have all the flags and banners and medals of honor…They have been given me by the Chinese and the Nicaraguans and the Haitians—by the poor people. I said to him…, “You are trying to buy me away from my own kind. When you have made up your mind that I will not go with you, then you come on and tell me.”

In a few minutes he came back to the back office and said, “Can I use your telephone?” “Yes.” He called up Chicago…and he said to MacGuire, “General Butler is not coming to the convention. He has given me his reasons and they are excellent ones, and I apologize to him for my connection with it. I am not coming either. You can put this thing across. You have got $45,000. You can send those telegrams. You will have to do it in that way. The general is not coming. I can see why. I am going to Canada to rest. If you want me, you know where you can find me. You have got enough money to go through with it…”

The convention came off and the gold standard was endorsed by the convention…

Then MacGuire stopped to see me on his way back from the convention…and told me that they had been successful in putting over their move.

I said, “Yes, but you did not endorse the soldiers’ bonus.”

He said, “Well, we have got to get sound currency before it is worth while to endorse a bonus.…”

I think there was one other visit to the house because he…proposed that I go to Boston to a soldiers’ dinner to be given by Governor Ely for the soldiers, and that I was to go with Al Smith . He said, “We will have a private car for you on the end of the train and have your picture taken with Governor Smith. You will make a speech at this dinner and it will be worth a thousand dollars to you…”

I said, “I do not want to have my picture taken with Governor Smith. I do not like him…No, there is something wrong in this. There is no connection that I have with Al Smith that we should be riding along together to a soldiers’ dinner. He is not for the soldiers’ either…”

“Well” he said, “Al Smith is getting ready to assault the Administration in his magazine. It will appear in a month or so. He is going to take a shot at the money question. He has definitely broken with the President…”

So I said at this time, “So I am going to be dragged in as a sort of publicity agent for Al Smith to get him to sell magazines by having our picture taken on the rear platform of a private car, is that the idea?”

“Well, you are to sit next to each other at dinner and you are both going to make speeches…and they will both be very much alike”

I said, “I am not going. You just cross that out…”

He said, “I want to go around with you, around the country. I want to go around and talk to the soldiers in the background and see if we cannot get them to join a great big super organization to maintain the democracy…”

I said, “If fiddling with this form of government is [your] business, I am out of it…”

“Oh.” he said, “I would not disturb this form of government.” I said, “You have got some reason for getting at these soldiers other than to maintain a democracy…”

Then along in the latter part of August of this year…he called me on the telephone one day and said that he wanted to know if I could meet him in Philadelphia that afternoon…

He said “The time has come now to get the soldiers together.”

“Yes,” I said, “I think so, too.” He said. “I went abroad to study the part that the veteran plays in the various set-​ups of the governments…I went to Italy for 2 or 3 months and studied the position that the veterans of Italy occupy in the Fascist set-​up of government, and I discovered that they are the background of Mussolini. They keep them on the pay rolls in various ways and keep them contented and happy; and they are his real backbone, the force on which he may depend, in case of trouble, to sustain him. But that set-​up would not suit us at all. The soldiers of America would not like that. I then went to Germany to see what Hitler was doing, and his whole strength lies in organizations of soldiers, too. But that would not do. I looked into the Russian business. I found that the use of the soldiers over there would never appeal to our men. Then I went to France, and I found just exactly the organization we are going to have. It is an organization of supersoldiers.” He gave me the French name for it…It is a superorganization of members of all the other soldiers’ organizations of France composed of…about 500,000, and that each one was a leader of 10 others, so that it gave them 5,000,000 votes. And he said, “Now, that is our idea here in America—to get up an organization of that kind.”

I said, “What do you want to do with it when you get it up?”

“Well,” he said, “we want to support the President.”

I said…, “Since when did you become a supporter of the President? The last time I talked to you you were against him.”

He said. “Well, he is going to go along with us now.”

“Is he?”…

He said. “Don’t you understand the set-​up has got to be changed a bit?..He has got to have more money. There is not any more money to give him. Eighty percent of the money now is in Government bonds, and he cannot keep this racket up much longer…He has either got to get more money out of us or…change the method of financing the Government, and we are going to see to it that he does not change that method…

I said, “The idea of this great group of soldiers, then, is to sort of frighten him, is it?”

“No, no, no; not to frighten him…Now, did it ever occur to you that the President is overworked? We might have an Assistant President somebody to take the blame; and it things do not work out, he can drop him…You know the American people will swallow that. We have got the newspaper. We will start a campaign that the President’s health is failing. Everybody can tell that by looking at him, and the dumb American people will fall for it in a second…Now about this superorganization—would you be interested in heading it?”

I said, “I am interested in it, but…you know, Jerry…my one hobby is maintaining a democracy. If you got these 500,000 soldiers advocating anything smelling of Fascism, l am going to get 500,000 more and lick the hell out of you, and we will have a real war right at home. You know that.”

“Oh, no. We do not want that. We want to ease up on the President…”

“Yes; and then you will put somebody in there you can run…The President will go around and christen babies and dedicate bridges, and kiss children. Mr. Roosevelt will never agree to that himself.”

“Oh, yes; he will. He will agree to that…We have got $3,000,000 to start with, on the line, and we can get $300,000,000, if we need it…”

He said… “I might as well tell you that our group is for you, for the head of this organization. Morgan & Hodges are against you. The Morgan interests say that you cannot be trusted, that you will be too radical… They are for Douglas MacArthur as the head of it. Douglas MacArthur’s term expires in November, and if he is not reappointed it is to be presumed that he will be disappointed and sore and they are for getting him to head it…” They want either MacArthur or MacNider . They do not want you. But our group tells them that you are the only fellow in America who can get the soldiers together. They say, ‘Yes, but he will get them together and go in the wrong way’…”

He said, “MacNider won’t do either. He will not get the soldiers to follow him, because he has been opposed to the bonus…”

I noticed that MacNider turned around for the bonus, and that there is a row over the reappointment of MacArthur…

Now there is one point that I have forgotten which I think is the most important of all. I said, “What are you going to call this organization?” …

He did not give me the name of it, but he said that it would all be made public; a society to maintain the Constitution, and so forth, and in about two weeks the American Liberty League appeared, which was just about what he described it to be…

They had a lot of talk this time about maintaining the Constitution. I said, “I do not see that the Constitution is in any danger,” and I ask him again, why are you in this thing?” He said, “I am a business man. I have got a wife and children.”

In other words, he had had a nice trip to Europe with his family, for 9 months, and he said that that cost plenty, too…

CHAIRMAN. We thank you, General Butler, for coming here this morning.

Source: INVESTIGATION OF NAZI PROPAGANDA ACTIVITIES AND INVESTIGATION OF CERTAIN OTHER PROPAGANDA ACTIVITIES PUBLIC STATEMENT OF SPECIAL COMMITTEE ON UN-AMERICAN ACTIVITIES HOUSE OF REPRESENTATIVES SEVENTY-THIRD CONGRESS SECOND SESSION RELEASED TO THE PRESS REPRESENTATIVES BY HON. JOHN W. McCORMACK AND HON. SAMUEL DICKSTEIN WHO WERE SITTING AS A SUBCOMMITTEE RELEASED IN NEW YORK CITY, N. Y. NOVEMBER 24, 1934, United States Government Printing Office, Washington, D.C.: 1934; See also: John L. Spivak, A Man in his Time (New York: Horizon Press, 1967), pp. 311, 322-25; Antony Sutton, “Chapter Ten: FDR: Man on the White Horse,” in Wall Street and FDR, New York: Arlington House Publishers, 1975.